The Benefits Life Cycle

Foster Soltoff & Love, Ltd.

The Benefits Life Cycle

Presented by:Paul F. Love, CLU, ChFC, CLTC

Foster, Soltoff & Love, Ltd.6550 Rock Spring Drive

Suite 190Bethesda, Md. 20817(301) 564-2966 [email protected]


Basic Medical Coverage•HMO

Phase I (0- 2 years)

•Point of Service

2-9 Employees

•Preferred Provider Organization

•COBRA


Phase II (2-5 years)

Comprehensive Medical

Core Benefits:

Dental Benefits

Vision Benefits

10 – 25 Employees

•HMO•Point of Service•Preferred Provider Organization•Follow the Platinum Rule


Phase IICore Benefits (Cont’d):

•Group Life Insurance

•Group Short Term Disability

•Group Long Term Disability


Phase II

Qualified Retirement Plans

•401(k) / Profit Sharing Plan

•Non Matching

•Safe Harbor

•Money Purchase Plans

Core Benefits (Cont’d):

Section 125 Plan•Premium Only

•SEP/IRA•SIMPLE IRA

•SINGLE K


Phase III (5+ Years)

Section 125

Voluntary Payroll Deduction Plans

•Medical Expense Reimbursement Plans•Dependent Care

•Supplemental Life

•Prepaid Legal•Pet Insurance

•Short Term Disability/Critical Illness

26 - 99 Employees

Executive Benefit Plans


Phase III (5+ Years)26 - 99 Employees

Employee Assistance Programs

• Confidential 24 hour access to personal problem solving resources, consultation and referrals

•Childcare•Eldercare•Crisis Management•Educational Issues

• Estimated 3-4% Payroll savings through reduced absenteeism

•Consumer Information•Financial Issues•Worksite Issues

• Issues include:


Phase IV (5 + Years)

•Supplemental Disability Insurance

•Long Term Care Insurance

•Partial Self-funding of Health Benefits

•Defined Contribution Medical Plans

•Section 529 Educational Savings Plans

•Pension Disability Benefit

> 100 Employees


Methods of Restructuring

Benefit Plans

for Affordability

9.7% Average Annual Premium Increases Between 2002 and 2012 in Fully Insured Plans

Avg. Premiums- $5,615 Single $15,745 Family

Less than 50% of firms with 3-9 employees offer coverage

Since 2002, Health Costs have Increased 97% vs. Inflation at 28% and Wage Growth at 33%

Source: 2012 Summary of Findings -Kaiser Family Foundation


THE PROBLEM


Some Solutions

•Higher Co-payments, Deductibles, Out-of-Pocket Maximums

• Prescription Drug Benefits

•Alternative Funding Methods

1. Medical

2. Prescription Drug Benefit

3. Short Term Disability

• Partial Self Insurance


Some Solutions Health Savings Accounts

• Created by the 2003 Prescription Drug Act PL No. 108-173 as amended by the Tax Relief and Health Care Act of 2006

• Creates savings accounts with maximums coupled with high deductible major medical plans

• Employee/employer contribution (2013 $3,250 single, $6,450 family)

• Lesser of 100% of annual deductible or Individual-min. $1,250-max $3,250 Family- min. $2,500-max. $6,450

• Catch-up contribution ages 55 or over (2013 $1,000)• Amounts grow income tax free and are withdrawn

income tax free for qualifying expenses.• Can be rolled over year to year• Accounts are portable on termination or retirement


Health Savings Accounts

•Providers do not understand how the plan works

Set up and maintenance fees

Must be coordinated with spouse’s health plan

Some Solutions

Issues:


• Defined Contribution Medical Plans

• Review Money Purchase Plans versus 401(k)/Profit Sharing Plans

Some Solutions

• Health Reimbursement Accounts (HRA)

Review plans annually Benchmark against competition When costs increase, make

incremental changes in benefits and, employee contributions

Choose a consultant who can work with you as you grow.


FINALLY…..

The Benefits Life Cycle

Documents

employeesfoster soltoff

problemfoster soltoff

phase iicore benefits

payroll savings

benefits life cyclepresented

health care act

health costs

prescription drug benefit3